Embezzlement by President Condo Bd

[bseward]

What is the name of your state (only U.S. law)? MD

I am a Condo Board member, and we have discovered that our President had been using our checking and savings accounts as personal bank accounts. He has apparently purchased items for a house he purchased last October and also used the accounts to pay for many personal items, including restaurant meals, etc.

We have been looking at the accounts, he was the only one with a debit card for the accounts. He opened an account at another bank and deposited funds into it from our accounts on a regular basis.

Now apparently that he has bought a house and used our money to help renovate it he is leaving his unit to his sister and moving out into his new house and was going to relinquish his position. His words...

That is until we started discovering what has been happening. Our Treasurer was not monitoring our accounts for over a year, not has our Secretary and we have not done our job in that regard as a Board.

He gave us a check for $6000 yesterday to our Secretary and asking her to forgive him for what he did. That may not cover all the funds he used we are still investigating that, but we are a small assn and those are all the funds we have. He had basically cleaned us out and we had checks bouncing.

All of us are very angry and growing more so by the minute, but we don't know if we should report this to the police or not. It seems to be a sticky situation, but it makes some of our blood boil that he was stealing from us the whole time, and it seems that he does not really understand that he is a thief.

He has a security clearance and some of us are mad enough to see that it get's revoked and that he gets prosecuted. BUT we don't know if that is the best course or if we will get any real satisfaction from it, some are willing to just see that he pays back all the money once we do a full audit and leave it at that.

Your advice...thoughts?

 

[HomeGuru]

What is the name of your state (only U.S. law)? MD

I am a Condo Board member, and we have discovered that our President had been using our checking and savings accounts as personal bank accounts. He has apparently purchased items for a house he purchased last October and also used the accounts to pay for many personal items, including restaurant meals, etc.

We have been looking at the accounts, he was the only one with a debit card for the accounts. He opened an account at another bank and deposited funds into it from our accounts on a regular basis.

Now apparently that he has bought a house and used our money to help renovate it he is leaving his unit to his sister and moving out into his new house and was going to relinquish his position. His words...

That is until we started discovering what has been happening. Our Treasurer was not monitoring our accounts for over a year, not has our Secretary and we have not done our job in that regard as a Board.

He gave us a check for $6000 yesterday to our Secretary and asking her to forgive him for what he did. That may not cover all the funds he used we are still investigating that, but we are a small assn and those are all the funds we have. He had basically cleaned us out and we had checks bouncing.

All of us are very angry and growing more so by the minute, but we don't know if we should report this to the police or not. It seems to be a sticky situation, but it makes some of our blood boil that he was stealing from us the whole time, and it seems that he does not really understand that he is a thief.

He has a security clearance and some of us are mad enough to see that it get's revoked and that he gets prosecuted. BUT we don't know if that is the best course or if we will get any real satisfaction from it, some are willing to just see that he pays back all the money once we do a full audit and leave it at that.

Your advice...thoughts?

**A: the HOA board should hire a CPA to conduct an audit then meet with the HOA attorney to discuss options.

 

[Antigone*]

**A: the HOA board should hire a CPA to conduct an audit then meet with the HOA attorney to discuss options.

Definitely needs an audit and much better internal controls.

I do have to tell you that this audit is going to cost the association a ton of money and you all have no one to blame but yourselves. If you decide that this is not worth it you might just settle with the thief for a specific amount after you do your own review.

If you decide to engage a CPA and then you should also call the police once you've determined exactly how much has been embezzled.

 

[izzie01]

Just a thought. I was PTA president for a number of years. It was written into our bylaws to have a independent audit every year. It was actually usually done for free by a firm since we were a non-profit. You may want to have something like that done for your HOA. A school near us had thousands stolen by a member of their PTA, wouldn't have happened with an audit.
Also, if you decide not to prosecute I would have something in writing regarding him repaying the stolen $. Take him to court then if he doesn't pay. Also, has a new home, maybe put a lien on it.

 

[Antigone*]

Just a thought. I was PTA president for a number of years. It was written into our bylaws to have a independent audit every year. It was actually usually done for free by a firm since we were a non-profit. You may want to have something like that done for your HOA. A school near us had thousands stolen by a member of their PTA, wouldn't have happened with an audit.
Also, if you decide not to prosecute I would have something in writing regarding him repaying the stolen $. Take him to court then if he doesn't pay. Also, has a new home, maybe put a lien on it.

Indpendent audits are very expensive to conduct. Not many non-profits get their audits done free of charge. I worked for a non-profit for many years and we paid - dearly - for our audited financials.

A good strong system of internal controls is a definite must though. Also, a management company may help provide services at a more reasonable cost. Especially in light of what has happened to them already.

 

[davew128]

Indpendent audits are very expensive to conduct. Not many non-profits get their audits done free of charge. I worked for a non-profit for many years and we paid - dearly - for our audited financials.

A good strong system of internal controls is a definite must though. Also, a management company may help provide services at a more reasonable cost. Especially in light of what has happened to them already.

I'll add that the reason an audit is expensive is because of the work and liability the CPA firm incurs. That said, even an audit isn't necessarily going to find fraud. If receipts and deposits never make it into the organizations bank account and there is otherwise no paper trail, an audit won't find it.

I could write volumes about horror stories I've seen with embezzlement for both profit and non-profit entities.

 

[Antigone*]

I'll add that the reason an audit is expensive is because of the work and liability the CPA firm incurs. That said, even an audit isn't necessarily going to find fraud. If receipts and deposits never make it into the organizations bank account and there is otherwise no paper trail, an audit won't find it.

I could write volumes about horror stories I've seen with embezzlement for both profit and non-profit entities.

It is also very likely that if the HOAs books appear to be so materially misstated that they affect the financial statements, an auditor may decline the engagement, no matter how much they pay.

 

[Silverplum]

All I can think of when I see this thread in the queue is: SEINFELD!

Jerry's Dad, Morty Seinfeld, ousted as Condo Board President, because Jerry bought him a Cadillac and the Board decides Morty must be embezzling because they believe there's no way Jerry could afford to buy his Dad such a nice car.




(I'm dreadfully sorry. I tried to NOT type this. I tried to leave it alone. I failed.)